The divorce process is not easy on anyone. Sometimes, you only have ‘you’ to depend on—especially in money matters. In such trying times, financial planning can help. Having a plan like that to handle the financial blows can help you regain control of your life.
Here are three steps to take when approaching this.
Know your current financial situation
Start with a clear understanding of your finances. This includes knowing your income, expenses, assets and liabilities. Review your bank statements, credit card bills, and tax returns.
Examining these documents accomplishes two things: it shows exactly where your money is going and helps identify potential problems before you do the actual financial planning. It can also help you make informed decisions if you choose to proceed with a divorce.
Create a budget
With a clear view of your finances, the next step is to create a budget. This detailed plan should outline how your income will be divided among your expenses, savings and debt repayments.
In creating a budget, consider the following:
- Regular bills: Rent or mortgage, utilities, groceries, car payments, etc.
- Discretionary spending: Dining out, entertainment, shopping, etc.
- Savings: Emergency fund, retirement, other financial goals.
- Debt repayments: Credit card bills, loans, etc.
This budget can guide your spending and saving habits. It can also provide a realistic picture of what your financial situation might look like post-divorce.
Set realistic financial goals
With your budget ready, you can set financial goals for your future. Whether you’re buying a new home, going back to school or saving for retirement, align these goals with your budget. Doing so ensures that your goals are achievable, given your current financial situation.
Starting over can feel scary. But think of it this way: you get a fresh start where the possibilities are endless.
Take care of financial complications
The aftermath of a divorce can be overwhelming as legal matters can complicate things. For instance, alimony and child support payments could affect your financial future, which can be challenging to navigate. This is where seeking an attorney can help. An attorney can guide you through these issues and help protect your rights in the divorce process.